We look at load growth in Palo Alto, CA with assumptions about Tesla sales there to measure the impact of electric vehicles on the local utility's sales figures and budgets.

“The future has arrived — it’s just not evenly distributed yet.”

— William Gibson

It’s budget season for many Gridium customers, and time to plan for yet another year of rate increases. Electricity rates are not set but rather calculated — total costs are divided by sales forecasts to determine the rates that your building pays. A dynamic since the great recession is that grid costs continue to increase, but electric sales are flat or down in key markets, leading to even steeper rate increases. California commercial rates are up over 20% in just five years!

Could massive load growth from electric cars change that?

The Economist has argued that electric vehicles (EVs) could save power companies from a death spiral, where sales impacts from energy efficiency and solar projects drive prices higher, which in turn encourages more solar and energy efficiency. EVs increase a typical home’s consumption by 25%, and help utilities buck the sinking sales trend.

While a mere half a million electric cars have been sold nationwide, certain (rich) communities in the US command most of the sales. Edmunds showed in 2013 that Tesla’s market share in wealthy Atherton, CA was 15% of new car sales! As many Silicon Valley facility managers know, there are never enough charging spaces for employee electric vehicles.

Palo Alto, in the heart of Silicon Valley, is also home to a municipal utility, the perfect laboratory to see the load growth from electric vehicles.

First, is there any sign of load growth in Palo Alto? 2015 sales as reported by the local utility were 967 GWh, up 1.5% since 2011. Compared that with California sales that are down 1.1% in the same period, thats strong growth. Of course, electricity sales fluctuate all the time and one would expect load growth in the middle of a tech boom. Could electric cars explain the load growth we have seen?

Let’s use heroic assumptions to see how much load growth could come from cars. Palo Alto has 26,000 homes and using county ratios, about 71,500 cars. Americans buy new cars every 11 years, but lets assume this is a wealthy suburb and no one would be caught dead in a eight year old car, meaning there are about 10,000 new cars sold to Palo Altans each year. At 15% of new car sales, that would mean about 1,500 new EVs each year. Assuming sales in earnest started in 2013, that means about 4,600 EVs are in use in Palo Alto. EVs get about 3.3 miles per kWh, so the total load is about 17,000 MWh.

Is this generalizable? Nationwide, our electric fleet is not even at twenty basis points of penetration; our estimates above shows EVs in Palo Alto at 5% of the fleet and penetration growing 1.5% per year. And still the load growth is modest. Very high sales rates of EVs produce perhaps 0.5% to 0.6% total load growth per year, far from enough to offset factors of increasing costs and decreasing sales. In short, even in communities that look like the future, EVs are a positive but flaccid force in the battle against declining electric sales. Nationwide, they aren’t even a material factor.

Of course the same was said about solar in the early days; that it wasn’t big enough to matter. But perhaps along with a recent green trend to electrify everything, that Tesla parked in your neighbors driveway could help make your budget a little easier in the future. Just be patient for the next few years.

Tom Arnold is co-founder and CEO of Gridium. Prior to Gridium, Tom Arnold was the Vice President of Energy Efficiency at EnerNOC, and cofounder at TerraPass.
Tom has an MBA from the Wharton School of Business at the University of Pennsylvania and a BA in Economics from Dartmouth College. When he isn't thinking about the future of buildings, he enjoys riding his bike and chasing after his two daughters.